Healthcare Town Hall

A new analysis looks at the cost of Medicaid expansion in the state of Nebraska and, as might be expected, the numbers are being interpreted a number of different ways. National Public Radio/Kaiser Health News has the story. The unique characteristics of Medicaid in Nebraska are another reminder of the diversity in healthcare costs from one state to another. 

This report looks only at Medicaid, which is how it arrives at the cost of between $526 million and $766 million for the state. The cost of uncompensated care has been held up as justification for the state to foot these kinds of costs.

As is so often the case anytime we talk about the cost of care, in addition to considering the specifics it can be helpful to step back and look at the underlying factors driving the healthcare cost trend.

Cost, Medicaid Medicaid expansion, Nebraska, Rob Damler

A new article in Modern Healthcare looks at the Healthy Indiana Plan, a Medicaid expansion program that has yielded some interesting results. Here’s an excerpt from the Modern Healthcare piece:

While the jury is still out on how well the health savings account and preventive-care incentive are working, analysts have looked at utilization trends among the newly insured and found that those signing up for the program are sicker and more frequent users of healthcare than those enrolled in commercial, employer-sponsored health plans.

The Healthy Indiana Plan “population used more care than the typical commercial population in Indiana with the same age and gender characteristics,” says Rob Damler, principal at Milliman, a consulting and actuarial firm. Damler is the consulting actuary to the state of Indiana on the health plan.

Childless adults enrolled in Healthy Indiana, for instance, had nearly three times as many inpatient services as private plan members in the first year. And pharmacy use was nearly 50% higher than a typical commercially insured population.

This newly enrolled group was also sicker than the general population. Their relative morbidity was 65% greater than their peers covered by private health insurance. The earliest enrollees to the program also proved to be the sickest, with the highest healthcare costs, Damler says.

This phenomenon is called anti-selection, where the least healthy population seeks healthcare coverage available to them, driving up the costs to insurers and the population covered.

The Healthy Indiana Plan offers some considerations for national reform, Damler says. “One of the issues that needs to be understood is pent-up demand,” he says. “We need to be prepared that the newly insured may cost more in the first 12 to 24 months than the insured population.”

Not surprisingly, insurance companies say that without a federal law requiring everyone to carry health insurance, national healthcare reform won’t work because the chronically ill will sign up for coverage in large numbers, driving up costs, while the healthy will stay on the sidelines.

“It only works if everyone’s covered,” says Alissa Fox, senior vice president of policy at the Blue Cross and Blue Shield Association.

Medicaid, Uninsured, Universal coverage, Utilization Indiana, Rob Damler

The Healthy Indiana Plan (HIP) is a Medicaid expansion program that offers perspective on the cost and utilization patterns of the uninsured as they enroll for coverage and access care. What follows is an analysis of the experience data from this program.  

Illustrating cost patterns during initial period of enrollment

The HIP populations also followed a particular pattern of utilization during the initial enrollment period. Figures 7 and 8 show measurements of inpatient, outpatient, pharmacy, and physician expenditures relative to average PMPM costs, first for caretakers and then for non-caretakers (for explanation of these populations, see the full paper). The 100% line measures the average PMPM for the first year of coverage for the population represented.

Figure 7: Caretakers

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Medicaid, Reform, Uninsured, Utilization Indiana, Medicaid expansion, Rob Damler

HC Pro has published an article about the Healthy Indiana Plan, with insight from Milliman principal Rob Damler. Here is an excerpt from the HC Pro article:

Anyone creating a health reform plan must understand that the first year (especially the first few months) will bring in people with the most serious medical problems and who will require the most expensive medical care, says Rob Damler, FSA, MAAA, principal and consulting actuary at Milliman in Indianapolis.

Milliman compared Indiana’s HIP population against the typical commercial population and found much higher inpatient services, ER visits, and pharmacy costs. Milliman discovered the HIP population was more likely to have chronic diseases, such as asthma, depression, and diabetes, than the typical commercial population. The first people to enroll in the program in the first few months had a higher morbidity rate.

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Medicaid, Uninsured individual mandate, Rob Damler

This week we announced the availability of a new paper that looks at the Healthy Indiana Plan (HIP), a voluntary Medicaid expansion program in Indiana. Among other things, the analysis assigns risk scores to enrollees based on their relative health and expected healthcare costs. This figure illustrates the average risk score for enrollees in the first months of the program. It looks at both of the populations modelled in the analysis: caretakers (those with dependents on Medicaid) and non-caretakers.

What does this mean? The paper provides some perspective:

HIP started in January 2008. In the first month there were very few people enrolled, so January numbers are not significant. But, starting in February, very meaningful numbers of people were enrolled. We charted those who enrolled in February, tracking their eventual risk scores. We did the same for each subsequent month of enrollees, tracking each group of new enrollees for the first six months and measuring their Medicaid Rx risk scores. The figure above shows that among those who enrolled in the first three to four months of HIP, caretakers had an average risk score ranging from 1.2 to 1.4; non-caretakers had a score between 1.6 and 1.8. Starting in May, June, July, and August, new enrollees were not as high risk or expensive, with risk scores 20% lower; the difference in health status primarily drove the decreased risk and cost.

What does this tell us? The first to enroll in this voluntary program had higher morbidity, with relatively healthier people enrolling a bit later.

 

Medicaid, Uninsured anti-selection, Indiana, Rob Damler

A new healthcare reform briefing paper by Milliman principal Rob Damler looks inside the first year’s experience of a Medicare expansion program in Indiana. This voluntary program offers a number of lessons about the behavior of uninsured populations and may offer various considerations as the country looks to find a way to cover the uninsured. Excerpting from the paper:

Anti-selection in healthcare describes, in general terms, the results that occur from the financial behavior of the highest-risk, most expensive people in seeking healthcare coverage that is available to them. The people who create anti-selection for a healthcare plan include those with serious chronic conditions, individuals with immediate near-term medical treatment needs, and those with pent-up demand for services that have been deferred for financial or other reasons. Access to coverage is of great value to such individuals, compared to the perceived value of coverage for someone without known acute or chronic care needs, and they are more likely to enroll in a newly available program. This is especially true if they do not currently have realistic access to coverage or if they have to pay a premium for such coverage out of limited income. A consequence of anti-selection is higher cost levels than would be experienced by the population at large.

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Medicaid, Reform, Underinsured Indiana, Rob Damler